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Apple beats all estimates to produce stellar fiscal 1Q15 results

Puneet Sikka

Apple beats all estimates to produce stellar fiscal 1Q15 results (Part 1 of 10)

Apple reports blockbuster results for fiscal 1Q15

Apple (AAPL) recently announced its fiscal 1Q15 results, which once again beat all analysts’ estimates. The strong performance in the December quarter resulted in revenues of $74.6 billion. These results comfortably beat the company’s own midpoint estimates of $65.0 billion and analysts’ expectations of $67.3 billion. The increase in diluted earnings per share (or EPS) was even more dramatic. Apple’s diluted EPS of $3.06 per share was way above the analysts’ expectations of $2.58 per share.

As the chart below shows, Apple’s diluted EPS grew by a massive year-over-year rate of 48% from $2.07 per share in fiscal 1Q14 to $3.06 per share in fiscal 1Q15. In our previous pre-earnings series on Apple, we expected that Apple could report robust earnings in fiscal 1Q15, which it eventually did.

Apple achieved this growth despite the currency headwinds due to the appreciation of the US dollar. The company had overcome the currency headwinds in fiscal 4Q14 as well, when it had also beaten the analysts’ estimates comfortably.

iPhone 6 and Plus success drive Apple’s growth

The main driver of Apple’s growth continues to be the iPhone. In December 2014, the success of iPhone 6 and Plus helped Apple beat Google’s (GOOG)(GOOGL) Android-based smartphones in terms of market share in the US. According to a report from Kantar Worldpanel, Apple’s iOS market share of 47.7% narrowly edged out Android’s 47.6% share. The report also mentioned that Microsoft’s (MSFT) Windows with 3.8% and BlackBerry (BBRY) with 0.3% market share continue to struggle in this market.

This is a significant achievement for Apple. The company has always focused on the premium segment, leaving the low-end smartphone market for Android to dominate. To get exposure to Apple, you can invest in the PowerShares QQQ Trust, Series 1 ETF (QQQ) which has about 13.5% weight age of Apple.

Continue to Part 2

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